Galaxy Digital has launched an OTC desk for prediction markets. The new service is aimed at institutional investors who need deals larger than what retail platforms can typically provide.
The service operates through the Galaxy Global Markets division. It covers contracts on non-sports events traded on Kalshi and Polymarket.
Immediately after launch, Galaxy executed its first deal for $10 million with crypto hedge fund Arca. The deal was related to whether the U.S. would pass a law regulating digital assets.
Institutions Enter the Prediction Market
Over the past two years, prediction markets have grown rapidly, but liquidity remains an issue. For regular users, this may be sufficient, but large funds find it harder to enter such deals without significantly impacting the market.
According to Bloomberg, the OTC deal between Galaxy and Arca for $10 million was almost five times larger than the total trading volume for a similar contract on Kalshi. That contract was also related to U.S. crypto legislation. The difference between retail and institutional capital is especially noticeable here.
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The head of prediction markets at Galaxy, Gilbert Wasserman told Bloomberg that for large clients, confidentiality is as important as liquidity.
On platforms like Polymarket, transactions go through blockchain, so wallet addresses remain visible. For institutions, this is a problem: the market may notice their positions before they can quietly execute their strategy.
To preserve client confidentiality, Galaxy uses event outcome contracts executed under standard ISDA agreements. This allows funds to work with prediction markets without a separate legal structure and without directly opening accounts on specific platforms.
Betting on the CLARITY Act
The deal between Galaxy and Arca is tied to the Digital Asset Market Clarity Act of 2025. The main question is whether the bill will pass through the U.S. Congress by 2027.
Under the contract terms, if the law passes, Arca will pay Galaxy. If the bill does not pass, Galaxy will pay.
Arca Chief Investment Officer Jeff Dorman believes that prediction markets are well suited for hedging risks related to crypto regulation negotiations. But existing platforms are still too limited in liquidity, making it difficult for large funds to participate directly in such bets.
Galaxy Global Co-Head of Digital Assets Jason Urban also believes that event markets are becoming an important tool for professional investors.
“Event markets are increasingly becoming a way to express macroeconomic views. That’s why they need institutional-grade infrastructure,” he said.
Galaxy Wants to Expand the Segment
Galaxy Digital plans not just to make individual event bets. The company wants to give clients the opportunity to combine positions in prediction markets with other hedging instruments across different asset classes.
This will allow investors to build more flexible strategies instead of being limited to a single bet on a specific outcome.
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Currently, the service works with Kalshi and Polymarket, but in the future Galaxy plans to connect other platforms as well.
According to Yahoo Finance CryptoProwl, only institutional clients will have access to the service. At the same time, Galaxy will separately assess the working conditions in each jurisdiction, taking into account local regulations.
Amid a general decline in crypto company stocks, Galaxy Digital (NASDAQ: GLXY) shares fell about 6% on Tuesday. At the time of publication, they were trading at $29.06.
